House of Commons Northern Ireland Affairs Committee Northern Ireland and the EU referendum First Report of Session 2016–17 HC 48 House of Commons Northern Ireland Affairs Committee Northern Ireland and the EU referendum First Report of Session 2016–17 Report, together with formal minutes relating to the report Ordered by the House of Commons to be printed 25 May 2016 HC 48 Published on 26 May 2016 by authority of the House of Commons Northern Ireland Affairs Committee The Northern Ireland Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Northern Ireland Office (but excluding individual cases and advice given by the Crown Solicitor); and other matters within the responsibilities of the Secretary of State for Northern Ireland (but excluding the expenditure, administration and policy of the Office of the Director of Public Prosecutions, Northern Ireland and the drafting of legislation by the Office of the Legislative Counsel). Current membership Mr Laurence Robertson MP (Conservative, Tewkesbury) (Chair) Tom Blenkinsop MP (Labour, Middlesbrough South and East Cleveland) Oliver Colvile MP (Conservative, Plymouth, Sutton and Devonport) Mr Nigel Evans MP (Conservative, Ribble Valley) Mr Stephen Hepburn MP (Labour, Jarrow) Lady Hermon MP (Independent, North Down) Kate Hoey MP (Labour, Vauxhall) Danny Kinahan MP (Ulster Unionist Party, South Antrim) Jack Lopresti MP (Conservative, Filton and Bradley Stoke) Dr Alasdair McDonnell MP (Social Democratic and Labour Party, Belfast South) Nigel Mills MP (Conservative, Amber Valley) Ian Paisley MP (Democratic Unionist Party, North Antrim) Gavin Robinson MP (Democratic Unionist Party, Belfast East) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No. 152. These are available on the internet via www.parliament.uk. Publication Committee reports are published on the Committee’s website at www.parliament.uk/niacom and in print by Order of the House. Evidence relating to this report is published on the inquiry publications page of the Committee’s website. Committee staff The current staff of the Committee are Robert Cope (Clerk), Philip Larkin (Committee Specialist), Nick Taylor (Senior Committee Assistant), Dominic Stockbridge (Committee Support Assistant) and George Perry (Media Officer). Contacts All correspondence should be addressed to the Clerk of the Northern Ireland Affairs Committee, House of Commons, London SW1A 0AA. The telephone number for general enquiries is 020 7219 2173; the Committee’s email address is [email protected]. Northern Ireland and the EU referendum 1 Contents 1 Introduction 3 The EU Referendum Debate 3 “Known unknowns” 4 Our Inquiry 5 2 Trade and Commerce 7 Northern Ireland’s Trade with the EU 7 Estimating the economic impact of a Brexit 8 Trade 10 Foreign Direct Investment 14 EU migration to Northern Ireland 17 The views of business 17 3 Agriculture 19 Agriculture in Northern Ireland 19 The Common Agricultural Policy 22 4 The Border and Cross-Border Issues 26 The border in the event of a Brexit 26 The Belfast/Good Friday Agreement 28 Policing and Security 30 The Single Electricity Market 31 Conclusions 33 Appendix 1: Referendum position of members of the Committee 35 Formal Minutes 36 Witnesses 37 Published written evidence 39 List of Reports from the Committee during the current Parliament 40 Northern Ireland and the EU referendum 3 1 Introduction 1. On Thursday 23 June 2016 the UK electorate will be asked to vote on the question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”. The referendum is a once-in-a-generation event, the outcome of which will have profound implications for the UK in a number of respects. With polls suggesting the ‘Remain’ and ‘Leave’ campaigns are closely tied, the votes of Northern Ireland’s 1.2 million electors could be crucial in determining the final result. This Report seeks to examine the issues which we believe should be amongst the most relevant to the electors in Northern Ireland when considering how to cast their votes. The EU Referendum Debate 2. Until recently at least, debate about the EU referendum in Northern Ireland has been relatively muted, being more focused at the national level, with little Northern Ireland- specific input. Conor Houston, the then Director of the EU Debate NI programme at the Centre for Democracy and Peace Building, told us his programme had been set up specifically because it was felt “there had been little or no discussion, both in civic society and business society”.1 Dr Lee McGowan from the School of Politics, International Studies and Philosophy at Queens University Belfast reiterated this, stating: “[…] what we do not have is a debate with the wider public. It is taking place among academics and businesses, but in the wider public there is no real debate yet about the EU and what it means”.2 3. It does seem as if the debate in Northern Ireland has lacked the intensity that party politics in Westminster has given it. Power-sharing between parties with differing views has meant the Northern Ireland Executive has not been able to articulate a clear position around which debate can focus in the way that has been the case in Scotland, for instance.3 4. This relatively muted debate appears to contrast with the situation in the Republic of Ireland, where there has been substantial attention devoted to a Brexit and the possible consequences south of the border. Irish governments have been quick to warn the UK of the detrimental effects of leaving the EU, clearly concerned about the possible consequences on their own economy, which is still recovering from its sovereign debt crisis. Some of the analysis of the possible consequences of a Brexit for Northern Ireland has come from the Republic.4 The Republic of Ireland has also highlighted its unique interest in terms of what the current Ambassador for Ireland described as the Republic’s “ties with Britain and for the north-south relations in Ireland”.5 Yet the process of maintaining relations in the event of a decision to leave the EU would create a different dynamic. Whatever the outcome, it would be crucial that these relations were maintained. 5. However, there are good reasons why Northern Ireland warrants special attention in the EU referendum. Northern Ireland is the part of the UK whose economy is most dependent on EU trade. In the event of a vote to leave, it will be the only part of the UK 1 Q234 2 Q3 3 The recommended positions of the five main political parties, as well as the TUV and the Green Party were outlined in oral evidence to the Committee during its visit to Stormont. See Qq298-524 4 For example, see A Barrett et al, Scoping the Possible Economic Implications of Brexit on Ireland ESRI Research Series Number 48, November 2015; and Dáithí O’Ceallaigh and Paul Gillespie (eds) Britain and Europe: The Endgame - An Irish Perspective, Institute for International and European Affairs, March 2015 5 Q121 4 Northern Ireland and the EU referendum that has a land border with a Member State which will, in effect, become the external frontier of the EU.6 Of course, Northern Ireland’s greater exposure to the EU is largely due to its relationship with the Republic of Ireland. The ability of farmers and companies to do business across the border and for continued cooperation between governments in a range of areas, including trade promotion and policing, in the event that the UK leaves the EU, are fundamental to the potential impact on Northern Ireland. “Known unknowns” 6. There are a range of uncertainties, or “known unknowns” in the words of the former US Secretary of Defence, Donald Rumsfeld, that make predicting the future impact of the EU for Northern Ireland with any accuracy impossible. The most obvious “known unknown” is that we do not know what type of relationship the UK will have with the EU in the event of a vote to leave. Several types of relationship with the EU have been posited in the event of a Brexit. They represent distinct alternatives but are essentially different points on a continuum that sees access to the Single Market increase in return for contributions to the EU budget and compliance with EU regulations (see paragraphs 24 to 35). Whilst a number of attempts have been made to model the economic impact of each of these, it became clear during the Committee’s discussions in Brussels that other unknown factors left the Commission unable to provide any further information on potential post-Brexit arrangements ahead of the referendum vote. Those who advocate leaving the EU tend to emphasise that, in the event of a vote to leave, it will be in the interests of the EU to prioritise negotiations with the UK and to conclude a deal swiftly, largely because of the trade surplus that the rest of the EU enjoys with the UK. In purely economic terms, it would be mutually beneficial to do so. Countries across the world sell their products into the Single Market—by which we mean consumers in the EU—so there should be no reason why the UK could not have similar access in the event of Brexit. On the other hand, those who advocate remaining in the EU emphasise that negotiations on an agreement could take years to conclude and the terms will inevitably be less favourable than those the UK currently enjoys. There is no incentive, they argue, to allow the UK to enjoy access to the Single Market whilst being free to ignore regulations that it finds costly, inconvenient or unpopular.